Innovation in retail ecosystem

“People need to be comfortable with being different”

“The Market Capitalization of this panel is about Rs 40,000 crores” – this introductory line by the session moderator , B S Nagesh, Vice Chairman Shoppers Stop and Founder TRRAIN, had the audience laughing in tandem.

The panel discussion on innovation in the retail ecosystem discussed the owner / manager “divide” when it came to innovation, the new “normal” in  real estate innovation, the need for “gutsy” CEOs and whether innovation can survive in large multinational companies operating in India.

(From L-R) Harsh C. Mariwala, Chairman & MD, Marico Limited; Kishore Biyani, Founder and Group CEO, Future Group; Manu Anand, Chairman, PepsiCo, India Region and Irfan Razack, Chairman and Managing Director, Prestige Constructions

(From L-R) Harsh C. Mariwala, Chairman & MD, Marico Limited; Kishore Biyani, Founder and Group CEO, Future Group; Manu Anand, Chairman, PepsiCo, India Region and Irfan Razack, Chairman and Managing Director, Prestige Constructions

Panel participants included Kishore Biyani, Founder of the Future Group, Harsh Mariwala, Chairman & Managing Director of Marico Industries Limited, Irfan Razack, CEO of the Prestige Group, & Manu Anand, CEO, PepsiCo India.

The liveliest debate was around the theme of “individual” v.s. “institutional” innovation.  Can the process of innovation be institutionalized to create scale? On the whole, the view was – yes it can.  But while processes can be created to deliver incremental innovation, game changing innovation can only be seen by someone who has the passion for the business and the ability to – as Kishore Biyani put it, “juxtapose data points out of context”. That sometimes means, that “first of a kind” ideas have to be “forced” down the organizational chain, until the market proves the success or failure of the idea.  Since success has many fathers,  ideas once successful, can be institutionalized and then the  organization can take over to deliver incremental innovation.  For example, in 2006, Future Group’s “Sabse Sasta Din” as a concept was implemented, in the face of much, unspoken, internal criticism.  Also, the idea succeeded “too much” – when launched,  the 24 participating stores had to shut down within 30 minutes, because the milling crowds caused riot concerns among the police and authorities. Seven years later, Future Group has created innovation history by “eventizing” our national holidays –  Independence and Republic day.

Can innovation survive in large, process driven, MNC organizations? While these organizations may lack a “face” in the sense of not always having a charismatic leader,  most MNCs have learnt that local empowerment delivers superior shareholder returns.  In the case of Pepsi, the category – food and beverages helps – because its decidedly local by nature. Besides, as Irfan Razack stated “Inclusiveness is the key to creating innovation in the ecosystem.  You need the passion to succeed irrespective of whether it’s a professionally managed company or owner driven”.

“We have an organization that thinks” – was Kishore Biyani’s rejoinder to the question of whether only the leader / entrepreneur is responsible for innovation. Marico has an “incubation cell” – a single person team – reporting to Mariwala which scouts and triages new ideas for implementability.  Each of the panelists highlighted the need for institutionalizing innovation to make it sustainable – but also spoke about the need for “gutsy” CEOs.  “You know that 2 out of 3 ideas will fail” said Manu Anand. That means you have to have someone who will empower his team by saying “Go ahead guys,  I will take the ‘can’ for this in case it fails”.

Does innovation fall by the wayside when you scale? – It can. Because as Mariwala explained – “the cost of failure gets higher and higher”.  So you’ve got to prototype and try things small. If you fail, fail small, and when you succeed, scale big.  “You’ve got to collaborate with partners and investors” – said Manu Anand – and “you’ve got to reward, what we call – ‘intelligent failure’” – continued Mariwala. “In other words, if you’ve done all you can in terms of preparation and execution, and the market simply won’t take up your innovation – it doesn’t make you a failure. So, we ensure that failure is routinely discussed in “innovation labs” and employees are not penalized in terms of increments or promotions simply because they have not been part of a success story. We also ask potential candidates to talk about their failures. If they are not able to talk about their failures and what they learnt in the process, they are not right for us”.

Does our education system kill innovation?  Not directly. But, “our education system creates linear thinkers – too much focus on the left brain. For example Stanford has a school of “Design” – the approach is to focus not just on the quantitative but also on experiential, or right brain qualities” said Kishore Biyani;  “that is, how we process visual, aural and sensory stimuli. This element is missing”.

There’s an attitude problem as well. “I’ve seen too many management students who think they have ‘arrived’ at the age of 23”  says Mariwala. “They need more humility – and they are too afraid of failure”.

Ideas for innovation when FDI opens up Retail.  An interesting analogy offered by the panel here was: “In the west, it’s all about one leader.  Look at posters of iconic movies like Rambo – it’s about one person taking on huge odds and winning. In India – it’s about the collective.  We have something in us that works with this collective – it creates local relevance – and it’s our equalizer to the financial might of any incoming retailer”.

What about innovation in people management? “We’ve realized that the people who really know the business are the department managers” said Kishore Biyani – “and we’ve created an ‘ideas’ hotline where people can call with their ideas and they will be listened to.  “We all focus on diversity” said Manu Anand – “but we also need to focus on diversity of thought. People need to be comfortable with ‘being different’. That’s when the best innovation happens”.

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Retailers Association of India (RAI) is the unified voice of Indian retailers. RAI is a not for profit organization (registered under section 25 of Companies Act, 1956), works with all the stakeholders for creating the right environment for the growth of the modern retail industry in India. RAI is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. RAI has a three charter aim of Retail Development, Facilitation and Propagation.